DHL Middle East update: Improving for air freight but ocean shipping remains impacted

At DHL Global Forwarding’s (DGF) latest Middle East ‘navigating disruption’ webinar, Tobias Maier, CEO for the region and Africa, highlighted a further improvement in air freight activity, but ocean shipping remains severely disrupted with the continued near-closure of the Strait of Hormuz.

“All airspaces across the region are open, albeit some with varying levels of restrictions such as fixed corridors or pre-approvals being required. Overall, we have noticed a further increase in air freight capacity being available and a first softening of rate levels, but which are still at significantly elevated levels versus pre-crisis. Maier added, “We are also seeing the first sign of airlines’ fuel surcharges starting to come down, with reports emerging that airlines are prioritizing international flights over domestic ones.”

Pause in ‘Project Freedom’

As for ocean freight, fresh attacks earlier this week by Iran on an oil refinery in the UAE and on several vessels in the Persian Gulf - which appear to have triggered a pause in the US’ Project Freedom’ to protect ships through the Strait - will have dealt a further blow to the already low morale of the estimated 20,000 seafarers aboard vessels trapped in the Gulf since late February.

Maier pointed to an ongoing situation where a lot of containers (bound for the Gulf) are in the wrong place having ended their journey, for the most part, at Indian and Sri Lankan ports. Some of this displaced traffic is getting to the Gulf but the process will take weeks or months to complete.

What’s more on arrival at heavily-congested ports in Oman, the UAE and Saudi Arabia, containers face a significant risk of demurrage and detention charges accumulating and affecting shippers, he warned.

“It is crucial to ensure containers are moving in a timely fashion out of ports after discharge even if this means higher road freight costs than usual, given the shortage of trucks across the Gulf Co-operation Council (GCC) of states.”

Restoring Air Network Accelerates

Also speaking at the seminar was Paul Dowling, DHL Express customer operations manager, MENA. who noted that re-establishing the logistics giant’s air network to, from and within the Gulf states had accelerated over the past fortnight:

“Among the significant developments is the return of intercontinental flights into Bahrain and Dubai, both from Germany and from Hong Kong. We then began to extend the network within the region as airports began to open up again and re-establish their operations.”

Most importantly this week, we have brought Qatar and Kuwait back into the air network as well as establishing collections from Italy to the Middle East and connecting the Middle East with Africa through Nairobi. So, once again we are linking Europe, Asia and Africa to the Middle East.

We're pretty much done with moving air shipments by road (as part of contingency planning) with the exception of heavyweight cargo. The plan is to continue to operate the backup air hubs in Riyadh and Muscat while the situation in the region continues to stabilize.” He said this week’s drone attacks on Dubai had not led to DHL cancelling any flights.

“Over the next couple of weeks, we plan to re-introduce fights beyond the GCC into Jordan, Egypt, Iraq and Lebanon followed by flights from the US into Bahrain.”

Recovery in Gulf Carrier Schedules

Ben Lambert, DGF’s VP, Regional Head of Airfreight, Middle East & Africa told the webinar that data showed a continued recovery in the schedules of Gulf carriers such as Emirates, Etihad and Qatar Airways, while the volume of cargo handled at the region’s airports was on the rise but still well below pre-crisis levels.

He said the “big movers” in terms of tonnage recovery were the Dubai airports, DXB and DWC, along with Doha.

As to the prospect of European carriers returning to the Middle East, Lambert noted: “In mid-May, there will be another review of the situation by the European Aviation Security Council, so we’ll see what recommendations come out of that. Currently, there is a very limited amount of capacity on Europe-Middle East routes.”

Last month, DHL launched a thrice-weekly B747F service between Liège and Jeddah, in Saudi Arabia, dedicated to pharma and life science cargo, with onward distribution across the GCC by road.

However, the destination in the Gulf has now been switched from Jeddah to Dubai DWC following the airspace re-opening.

“We've done over 10 flights - around about 800-900 tons of cargo - feeding into Bahrain, Kuwait, Qatar, UAE, and Saudi Arabia, and it has been massive success.”

Commenting on the reason for the switch, Lambert said. “DWC is closer to the Gulf states. The road distance from Jeddah to Riyadh alone is virtually the same distance from Riyadh to the UAE. So, it does make sense logistically. The plus side is that we can re-activate Jeddah at any time.”

Overland Transit Developments

Turning briefly to road freight, DGF is operating services from Europe/Turkey to the GCC via Syria and Iraq while an alternative transit route, via Lebanon and Jordan, has been introduced too.